on Jun 14th, 2010 in Pricing & Rates | 11 comments
 
The Postal Service has more than 10,000 prices contained in a 1,800-page customer manual known as the Domestic Mail Manual (DMM). The DMM provides individual and commercial mailers with information about postal services and standards for both domestic and international mailings. The Price List, also known as Notice 123, contains domestic and international retail and commercial prices for all postal products and services. The list covers every price from mailing one First-Class Mail® letter to paying for a 100,000-piece mailing that has been presorted and transported closer to its final destination. If the mailer wants extra services such as Signature Confirmation, Collection on Delivery, or insurance, prices for these services are also provided. Does the Postal Service need more than 10,000 prices for its products and services? Can the Postal Service significantly reduce the number and complexity of prices?

Share your ideas on how improvements could be made to the Postal Service’s DMM and prices, and what the Postal Service can do to significantly reduce the number of prices. Or tell us why you feel the current DMM and pricing structure should remain unchanged. This topic is hosted by the OIG’s Office of Audit Capital Investments team.

11 Comments


The Postal Service is approaching complications that mimic tha U.S. tax code. Mailers and employees alike don't fully understand the current pricing structure and mistakes in mail prepartation and verifications are likely leading to lost revenue and productivity. Simplify the rates and discount opportunities to provide the best customer service and use our underutilized infrastructure.

We need to make everything flat-rate. That way we can create a POS system with a picture of the item, and we'll be all set for the Target employees to take over as clerks.

The OIG recently posted a survey regarding rate complexity which asked the questions: “Does the Postal Service need more than 10,000 prices for its products and services? Can the Postal Service significantly reduce the number and complexity of prices?” Proponents of rate simplification should know that complex rates aren’t necessarily a bad thing for mailers. Most large mailers calculate their postage by computer, not paper and pencil. The software programs that perform these calculations are quite robust. They easily handle 10 or 10,000 rate cells and are very good at making cost effective decisions on mail preparation. If your business uses a computer to calculate rates, complexity should be a non-event. And if the rate cells provide the proper pricing signals, you should be able to determine the lowest cost method to mail your products.
A second important issue to consider is cost coverage. Let’s use Periodicals as an example, since their rates are among the most complex. In 2006, the PRC approved a new rate structure for Periodicals that recognizes the cost of processing containers, bundles, and pieces. By design, this new structure made the rates more complex. Its intent was to align rates with costs - in other words, pay for what you use. Unfortunately, the new rates did not pass through all of the costs, so that the pricing signals sent to mailers continued to be inaccurate. In spite of only partially improved signals, mailers and mail service providers reacted to the new rates. As a result, co-mailing, co-palletization, and drop shipping expanded and helped to reduce USPS costs. From FY 2004 to FY 2009 alone:
•Periodicals pieces sorted to the most-efficient and least-cost Carrier Route level increased from 47 to 55 percent;
•Periodicals pounds privately shipped and entered at a destination facility rose from 57 to 65 percent; and
•The number of sacks – more expensive for the Postal Service to handle than pallets – declined by 65.9 percent, from approximately 110 million sacks in FY 2004 to 28 million sacks today.

In the absence of more cost-based rates, these improvements never would have taken place and Periodicals class mail would have even lower cost coverage than its current 76%. In my opinion, given the dire financial situation of the Postal Service, providing pricing signals that drive out costs far outweighs the need for rate simplicity.

I think the problem with the DMM is not with the number of rate elements but with the high complexity of the regulations for mail preparation and the difficulties one encounters in trying to navigate through these regulations in the DMM.

Taking Periodicals as an example, some have complained that there are too many rate elements (though other postal products have many more individual prices.) But consider the complexities involved in preparing a Periodicals mailing. There are regulations, involving various labeling lists, for bundle preparation at different presort levels, then for placing bundles in sacks or pallets at different presort levels. There are more regulations to assure that bundles, sacks and pallets are not too large, or too small, and still more regulations regarding documentation and where and at which times the mail may be entered. If a mailer succeeds in all this, then assigning a price to each outcome (e.g., each bundle, sack and pallet presort level) is a trivial exercise in comparison.

So I think the focus should be not on the number of rate elements but on whether the instructions for mail preparation in the DMM can be simplified and whether navigating these instructions in the DMM can be made easier.

I see 1 oz flats nightly with anywhere from $0.00 to $0.61 postage on them. The rate should be $0.88. Same thing with priority and certifieds, nobody checks the metered mail and a lot of business' rely on that. Management in my plant say it's not my job to catch short paid and not to worry about it.

USPS has been increasing its price every year (luckily not this year) because of this!

In my area of Southern NJ (Woodbury and Woodbury Hts)-the postal clerks are miserable, Sarcastic, rude and lazy. This has been going on for the 5 plus years of using their services. I have never experienced such a rude and obnoxious group of workers. Customers continue to walk out at the ridiculous attitude and service provided by these ungrateful government workers. Consumer affairs has been notified by myself and many others and nothing ever changes. I have no sympathy for a Government agency that does not care about it's customers.

MMMMmmm. All the money spent on commercials and on promos (childrens movies etc.) What is being done about customer service? Nothing! Don't get me wrong, there are some wonderful post office workers out there who work hard and who care. But not in my town.
A friendly attitude and helpful manner go a long way. If the post office trained window clerks to be polite, caring and helpful and then rated their efficiency on those criteria-we would not need all the advertising. Spend money where it's needed and stop denying there's a problem.

Sorry, my previous post should not have been under this topic.
The post office needs to simplify the pricing. The last Priority mail increase made it difficult for small business especially since the rates wre increased so high when shipping coast to coast.

"We need to make everything flat-rate" ... I agree with WNY clerk, even though he is being sarcastic. Flat-rate priority boxes are a big hit. So why not flat-rate letters? And flat-rate large envelopes, too? Seems like a "No Brainer" to me. And while I'm on the subject, how about longer window hours so customers can get their stuff at 7:00PM or 8:00PM after work? Or maybe at 6:00AM on their way to work? Just one person's opinion, thanks.

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